Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 17 - Evidence - Meeting of November 22, 2012
OTTAWA, Thursday, November 22, 2012
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:30 a.m. to study economic and political developments in the Republic of Turkey, their regional and global influences, the implications for Canadian interests and opportunities, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, I see a quorum. We are here to study the economic and political developments in the Republic of Turkey, their regional and global influences, the implications for Canadian interests and opportunities, and other related matters.
We have by video conference from London today Mr. Robert O'Daly, Senior Editor/Economist in the Western Europe section of the Economist Intelligence Unit.
Mr. O'Daly, I understand that you have been advised that some opening remarks would be appropriate and then senators like to ask questions. I have already started the list. Welcome to the committee. Thank you for being with us and changing your schedule to accommodate our meeting time. The floor is yours.
Robert O'Daly, Senior Editor/Economist, Western Europe, Economist Intelligence Unit: Thank you. I will give a brief introduction to what has happened in Turkey in the last 10 years, with a specific focus on the last 5 years given that is much more relevant to what is happening today.
In the transcripts that I received from your last meetings, you have highlighted pretty well the huge progress that Turkey has made in the last 10 years under the single-party government that has provided government stability and carried out substantial political and economic reforms. Some measures have been introduced that have started to address the Kurdish issue in southeast Turkey. The role of the military in Turkey has been reduced to some extent under civilian supervision, and there seems to have been an acceptance of this most recently on the part of the military. A more open system of judicial appointments has been introduced, which is quite a major reform in Turkey given the role of the judiciary in the past, the constitutional court and episodes like closure of parties and, in particular, an attempt to close down the AKP in 2008.
In the last decades, Turkey's economic growth performance has been very impressive, 7 per cent a year real GDP growth in the decade up to 2011. Its fiscal performance has been extremely strong. It is recovering from the 2001 crisis that left the country with a government debt of about 100 per cent of GDP, and today Turkey has a government debt of just less than 14 per cent of GDP and government deficits of probably 2.5 per cent of GDP this year.
In addition to that, in 2008-10, post-Lehman Brothers crisis, the global storm, as well as financially there was a recession, but the banks remained stable, and fears of balance of payments crisis were not seen.
The government has weaned itself off IMF standby agreements which came to an end in 2008. Up until about 2010 there was constant talk of another agreement and fears that, if another agreement had not been signed, Turkey's economic policymaking would be damaged.
As it happens, the Turkish government has managed the economy extremely well up until now and, following the 2008-09 global crisis, the Turkish economy rebounded strongly in 2010-11. In 2011-12, it is important to recognize the policy-induced soft landing that Turkey has managed to achieve, at least so far, from surge in growth is very much focused on very strong domestic demand which resulted in a surge in the current account deficit which was potentially financially destabilizing, macroeconomically destabilizing. Growth has slowed; Turkey still has moderate growth in difficult environments, the current deficit is coming down, and inflation is coming down as well.
I certainly think the track record is good. There are challenges ahead. I will just briefly identify those, because I assume those will be the subject of your questions.
From the economic point of view, maintaining economic growth and macroeconomic stability is crucial. In a positive light, the government key ministers and the fiscal and monetary authorities have a clear memory of the crisis in 2001 and so tend to focus on policies that generate stability and try to avoid policymaking decisions that might be popular but end up being destabilizing.
The process of rebalancing the economy still has some way to go, away from domestic demands toward external demand. In order to do that, Turkey needs to achieve a higher savings rate. Turks tend to consume and not save. As a result, these are structural features that are behind Turkey's very large current account deficit. So, reforms have begun, but more needs to be carried out in order to achieve that.
The other major issue is because of Turkey's very close ties, economically and financially, with the eurozone. The eurozone crisis and the uncertainty that creates require Turkey's authorities to manage the economy in various ways in order to minimize the negative impacts from the eurozone crisis. The impact comes on the trade side, but it also comes on the financial side because for growth Turkey depends on capital inflows, and a lot of those capital inflows are short- term portfolio inflows coming from Europe. Therefore, managing monetary policy has been highly challenging in the last few years since the intensification of the eurozone crisis has spread beyond Greece, Ireland and Portugal. So far, that has been reasonably well managed. However, there may be further challenges in the future.
The political front is where the Economist Intelligence Unit has its main concerns. The opposition to the Justice and Development Party, the ruling party that has been the government for 10 years, is fragmented. It is weak; it generally fails to come up with constructive oppositions in policy debates, and it is very hard to see any of the opposition parties offering an alternative in government beyond the next election, which must be held in 2015.
The Kurdish issue remains. In your transcript highlights, it was noted by those who addressed the committee that there has been worrying escalation in violence by the PKK in the southeast and, in addition, PKK-affiliated groups in Syria have taken towns in Syria, so that has stretched the security forces in the southeast. They are now having to patrol the border and fight a battle with the PKK along a 900-kilometre-long border ranging from Iraq/Iran all the way down to Syria, so that will be a major challenge ahead.
The final issue I will address is the government's commitment, and the opposition's as well, to introduce constitutional reform to overhaul the constitution, to introduce a constitution that will replace the military-inscribed constitution of 1982 in order to better protect individuals' rights, which in the past has not been the case.
Unfortunately, the debate around the constitutional reform at the moment is entirely focused on Prime Minister Erdogan's desire to enhance the presidency — the president being elected for the first time by universal suffrage in 2014 — and the powers of the presidency before he will then probably run in 2014, when he steps down as prime minister.
The year 2014 appears to present numerous challenges because of the presidential election, because of Mr. Erdogan's ambition to become president, and because of Mr. Erdogan's and his supporters' desire to introduce a presidency with executive powers. In 2014, because of the bylaws of the ruling parties, Mr. Erdogan and several other leading figures in the party have stepped down because no party member can be elected for more than three terms, according to the party statutes. There appears to be some genuine commitment to this, but it also represents the challenge of renewal of the party's leadership and maintaining government stability beyond 2014. I would like to close my remarks there.
The Chair: Mr. O'Daly, thank you for that overview on many topics. It will not surprise you I have a long list of senators who wish to ask questions of you.
Senator Downe: Thank you for that presentation. I notice you mentioned Turkey's application for the European Union membership. I know they work in various chapters, but is there any realistic chance that will happen in the next decade?
Mr. O'Daly: No, I do not think so, for various reasons, the first being there are serious concerns about the level of public opinion within the European Union against Turkish membership.
Another factor is that a lot more has to be done in Turkey with issues such as human rights, individual rights and freedom of expression, which I see is an issue that has been addressed in your previous meetings.
Finally, because of the eurozone crisis and because of Turkey's more assertive role on the international stage and its desire to become a regional power, it has made some progress on a combination of things. The crisis in Europe and Turkey's renewed confidence in recent years has made EU membership far less attractive to Turkey than it was in the past. A combination of these factors, in our view, makes it unlikely that Turkey will join in the next decade.
Senator Downe: Thank you. The former government, particularly the former military leadership in Turkey, used to be very close to Israel, but I read in a Canadian newspaper this week that the Prime Minister of Turkey referred to Israel as a terrorist state.
Could you expand on what Turkey's long-range plans are in the region? What countries are they trying to align themselves with? Can their relationship with Israel be repaired?
Mr. O'Daly: That is a very difficult question. At the moment, Turkey seems to be very much focused on its relations with the West because of the problems along the Syrian border. I am sure that you saw yesterday that Turkey has requested NATO air defence missiles to be deployed on the Turkish-Syrian border, which then requires NATO to make a decision whether to be more closely involved in Turkey's ongoing tensions with Syria and be closer to the conflict in Syria.
Outside of these sort of Western relations, Turkey is fostering very strong ties with the Kurdish regional governments in northern Iraq at the expense of the federal government in Iraq, primarily, it seems, because Turkey believes that, in order to contain the PKK and the attacks that have escalated in the southeast in the last year, it has to have preferential ties with the KRG.
Outside of that, Turkey has ties with Iran, but has been oscillating between the positive and the negative with mediation on nuclear program issues, so they are rivals with Iran for a leadership role in the region.
Turkey's relations with Israel are being affected, I believe, by Turkey's desire to play a leadership role in the region. In many other countries, Israel's role with and the treatment of the Palestinians is not acceptable, so popular opinion in Turkey is anti-Israel and there is condemnation of the attacks on Gaza. I do not see how Turkey can come to some sort of cooperation with Israel, even though it would be highly desirable given the situation in Syria.
Senator Downe: My last question is on the media. I keep reading about the suppression of press freedoms in Turkey. Could you elaborate on that?
Mr. O'Daly: That is certainly an issue. It has been highlighted by the European Commission's annual progress reports in the last couple of years. It seems there are laws, such as the anti-terrorism law in particular, that have been used in order to silence and arrest journalists. The government's line is that many of these journalists have been associated with groups that have been involved in planning a coup, with the sledgehammer investigations and trials that have been going on.
However, I think the most worrying aspect of the relationship of the government with the media in Turkey is the fact that many newspapers are now undergoing what you would call self-censorship. There are very few journalists who are prepared to write critically of what the government is doing for fear of being taken to court or even being jailed. It is an issue that the President of Turkey, Abdullah Gul, is extremely concerned about. However, there does not seem to have been any movement from the government to address the issue since it was first highlighted when the investigations began and journalists started to be arrested. So, there are certainly very worrying aspects of the Turkish political scene.
[Translation]
Senator Fortin-Duplessis: Thank you, Madam Chair. Mr. O'Daly, thank you for appearing via video conference before our committee despite your very full schedule. My questions are about Turkey's membership in the European Union. My colleague just asked you a question on that. I would like you to tell us a little more about the more contentious aspects of those negotiations.
[English]
Mr. O'Daly: Essentially, Turkey made considerable progress in the first couple of years after the negotiations began in October 2005. However, since the start of the government's second term — it is now in its third term — various progress has been made. There are 35 chapters covering issues from custom regulations, to financial regulations, to the environment, et cetera, which I am sure you know about. Of those 35 chapters, only 13 have been old ones, and the new ones have been provisionally closed. The rest have either been suspended or there is internal opposition to the opening of the chapters either from Cyprus or from France, or one of the other EU members. No chapters have been opened since the end of 2009. We are now in 2012. I do not think there are technical issues, and I do not think there are specific policy issues that are causing the lack of progress.
It is a political issue. Cyprus, in particular, is opposed to making further progress on Turkish membership negotiations so long as the Greek Cypriots are in negotiations with the Turkish Cypriots for the resolution and settlement of the division of the island. Turkey refuses to recognize the de facto Greek Cypriot government of the Republic of Cyprus, which has control of itself but is also the recognized government of the entire island, including the north which is occupied by something like 35,000 to 40,000 Turkish troops.
There are major political obstacles, both in Turkey and with the resolution of restrictions on the freedom of the press, the Kurdish issue, et cetera, so there is resistance to reforms in many of these areas.
Then there is also political resistance within the EU. The change of presidents in France, for example, from Sarkozy to Hollande has made absolutely no difference so far. Sarkozy was very outspoken. There have been no initiatives in order to bring about a rapprochement on the EU issue. The majority of the French people, like those in many other countries in the EU, are opposed to Turkey becoming a full member of the EU. In the shape the EU now has, obviously, if as a result of the eurozone crisis the EU becomes a more flexible organization with different levels of integration for different countries in different areas, then that would perhaps be more acceptable and more amenable both to EU countries and to Turkey for membership. It would perhaps be more like the privileged partnerships that Merkel and Sarkozy were talking about in the past.
As things stand at the moment, the prospect for Turkey of anything other than full membership is unacceptable. Public opinion in Turkey has plummeted since its perception of the EU and Turks' belief that they will one day be allowed to join the EU has tumbled to something around 25 to 30 per cent of the population. It was around 75 per cent of the population when negotiations started. It is a highly political issue and not a technical issue of reforms and legislation in the harmonization process.
The Chair: I have to take into account the questions and answers. If we can be a bit more efficient, I can get everyone in on the first round.
Senator Nolin: Good morning, Mr. O'Daly. Yesterday we started to explore with another witness the question of access to financing. Reading our briefing documents, we understand that for the local Turkish population, it is somewhat problematic to get access to financing. We take as evidence and we rely on the World Economic Forum's report of 2011-12, which basically states its access to financing is almost the most problematic factor in doing business in Turkey.
Do you agree with that? Why is it so difficult?
Mr. O'Daly: Certainly, that is a problem in Turkey. Part of the reason why there are difficulties in accessing financing is because of the low savings rates and, hence, much of the buying by Turkish companies is through the large family conglomerates that have access to international financing, whereas local financing is quite rare.
Also, 99 per cent of Turkish companies are small- and medium-sized businesses and, as in many countries, there is limited access for small- and medium-sized companies to local financing.
If you look at the Turkish stock exchange, the floats on the Turkish stock exchange are 60 to 65 per cent held by foreign investors, which means there is very little domestic investment in Turkish companies posted on the Turkish stock exchange.
The obstacles or financial complexities are probably beyond me. It does appear, for example, that it is very hard to get any form of medium- or long-term financing. All forms of financing from the banks are one to two years, which may be fine for your general operating capital, but it is not fine for companies that need to invest medium term or long term in order to expand their business or to invest in new technology. I think that is fundamentally related to the heavy reliance on external capital inflows and the very low level of domestic savings in Turkey.
Senator Finley: Thank you for your presentation, Mr. O'Daly. I want to clarify the response you gave to my colleague Senator Nolin and something you also said during your introduction, and that is the consumer culture of Turkey.
The average age, I understand, is 29. As they have come through various recessions and growth periods, the nation seems to have a spending habit. They buy a lot of stuff and have very little in the way of retirement savings which leads to what you mentioned to Senator Nolin with regard to the ability to lend.
Do you see this changing as the population ages? As it gets to a higher average age, do you think there will be an inclination to save for the future?
Mr. O'Daly: Well, the U.K. has a much higher average age and one of the major problems is getting the bulk of the population to save for their old age, so that is not purely demographic.
In terms of what is the government doing in order to incentivize savings and pensions, there have been reforms introduced in the last year to incentivize private pension schemes. They are slow to get off the ground, but it is early days. Providing tax incentives for people to save longer term will be beneficial in the long term. However, the problem, at the moment, is in the short to medium term, being that Turkey has a huge government deficit, even though it is declining, but it will still be $55 billion this year, about 7 per cent of GDP.
In addition, it has short-term debt of around $100 billion which must be rolled over next year, so it either must be repaid or Turkish banks and private companies, non-financial institutions, have to borrow internationally again in order to roll that debt over.
The policies that have been introduced in the last year trying to stimulate more savings may have beneficial effects in the long term as perhaps demographically habits change and the population ages, as you said, or as the populations with greater macroeconomic stability recognize the financial benefits of and become aware of the incentives the government is providing in order to save for the future.
However, there seems to be a time mismatch with the short-term situation, especially at a time when there is huge uncertainty globally about capital interest. At the moment, capital flows are more than sufficient to cover Turkey's external financing needs; however, we have seen in the past all it takes is for a sharp deterioration in sentiments regarding the eurozone crisis, and then investors also withdraw from emerging markets, particularly emerging markets like Turkey's that do have large external imbalances.
Senator Finley: I have one last question that also follows on my colleague's line of questioning.
Tell me about the government's attitude or the business attitude toward foreigners, Canada, for example, involving themselves commercially or otherwise in government infrastructure and defence spending. Are there any, for example, particularly offensive corporate taxes or roadblocks that Canadian companies might find en route to winning contracts?
Mr. O'Daly: My understanding is that foreign investors have exactly the same tax treatment and access to investment incentives that domestic companies do. I do not believe that there are any legislative obstacles.
However, as in many countries, companies that have close ties with the government perhaps will be viewed more favourably. I find it quite remarkable if you look over the last few years since they broke up the electricity distribution network into 20 different regions that about half of them have been sold off and another half are on the block to be sold because the current government is very much in favour of private sector-led growth and the reduction in the size of the state. However, there has been very little interest from foreign companies in these tenders. They have almost all gone to Turkish conglomerates and Turkish-led consortiums. However, Halkbank, one of the last banks, sold I think 24 per cent of the government's stake in the bank just a few days ago and the foreign institution investment interest in it is huge. I think 80 per cent was taken up by foreign institution investors.
There seems to be a reluctance to get involved in privatization deals that are going on and a willingness to buy a stake in a public offering, a primary initial public offering or secondary public offering. That may be because of variables such as knowledge of the legal system. One of the assets of foreign investments in Turkey, which is fairly small in the size of the economy, is that most successful foreign investments in Turkey so far have been joint ventures where a foreign company identifies a Turkish partner, very often one of the large family conglomerates.
The Turkish economy is diversifying rapidly. Many of those have been highly successful. Koc and Fiat. and Oyak- Renault are examples. Perhaps the way to clear the obstacles is to focus on joint ventures initially rather than wholesale fully owned foreign subsidiaries in the country.
Senator D. Smith: I am curious as to your thoughts on Syria. If this Syrian crisis perpetuates and drags on and on, at what point does that start to have a serious impact on the stability of the area and on the economy? I know there are these border crossings. I do not see Syria wanting to stir the pot too much more, but there have been a few incidents. There is also the possibility of the Kurdish elements being restirred and that becoming another issue and also the potential for huge numbers of refugees. Do you think Assad will hang in for years, or at some point will this end?
Mr. O'Daly: There are already hundreds of thousands of Syrians in the camps on the borders in Turkey. They have been crossing for months now. It is a major source of concern to the government, because at some point harbouring that many refugees becomes financially and, from a humanitarian point of view, extremely difficult.
I think that in terms of the Turkish government's quite assertive foreign policies in recent years and its desire to strike a more independent line from the western lines it had generally followed, it has come up short on this particular occasion. Prime Minister Erdogan has been one of al-Assad's fiercest critics, having been one of his closest allies for several years. I think he generally believes the conflict in Syria will be over quite soon and that it was an astute move for domestic public consumption on a regional basis to side with the rebels in Syria.
However, there does not seem to be an end to this crisis. I remember six months ago, I think it was, that we were coming close to the end and then there was an escalation. Turkish relations with Syria have deteriorated dramatically since June from the downing of the jet and with the shelling of the village on the other side of the border in early October. There has been sporadic shelling on both sides since early October and now there is a request to deploy NATO air defence missiles along the border.
It looks like tensions will escalate rather than decline. However, as you say, if it does not end soon, Turkey will find itself in an extremely difficult position, especially given that its western allies have no appetite for intervention in Syria, having already been stretched in Afghanistan and having already intervened in Libya in 2011. There does not seem to be a willingness to get involved. It is a major concern for the Turkish government, and I do not see an easy way out.
I do think that it is not in Syria's interests and it is not in Turkey's interests to allow the situation to escalate into a major military confrontation. Turkey is too busy trying to deal with PKK issues in the southeast, which is being exacerbated by the conflicts in Syria, and the al-Assad regime is fighting a civil war. I think there will be a certain amount of caution and desire to vote, but you cannot guarantee that that is the way it will play out. It is a very worrying situation.
Senator D. Smith: Where there is a will, there is a way. It is good to see how quickly they got the ceasefire between Israel and Gaza, but this Syria thing seems to be going on indefinitely.
Senator Wallace: Thank you, Mr. O'Daly. From what we have heard, there certainly appears to be great opportunity for increased trade and relations between Canada and Turkey. Yet, I would think that among Canadian business people — obviously, there are exceptions to this — Turkey is a bit of an unknown. I would say, from what I have heard, that there are great opportunities to thicken that relationship.
In business, timing is everything. I am wondering what your thought would be. For Canadian business to expand its relationship with Turkey at this point in time, it would have to take into account, as you pointed out, the close ties that Turkey has to the eurozone. When you look at the last year, in particular, fiscal uncertainty exists within that zone, which might impact Turkey in terms of the relationship that Turkey has with the countries that border it and with which it has close commercial relations — Iran, Iraq and Syria — as well as the current situation in Gaza and how that impacts in Israel.
When you take all that into account, at this point in time, for Canadian businesses — which may not have had much, if any, experience with Turkey — to consider creating those relationships with Turkey, is this the point in time that they should seriously consider it; or, because of all those uncertainties, would the business risk perhaps be too high? I realize that, depending on the business they are in, that analysis could vary. What would your thought be for those who might be uncomfortable at this point in time to move into that part of the world, when you take all of that into consideration?
Mr. O'Daly: I remember that in the 2001 crisis, there were many foreign companies. Of Burger King and McDonald's, one went in as the crisis got into full flow, and one left. It is about perception of opportunities. I cannot remember which exited and which entered the market, but the one that entered the market has done extremely well since then. Those are strategic business decisions that are made by corporations and it does depend on the setting.
At the moment, for Turkey, I believe there are opportunities for Canadian companies in sectors like energy. There is a considerable amount of activity going on in the energy sectors, from electricity distribution to gas pipelines and oil pipelines. Turkey has certainly become an energy hub in the region between the Caspian, Middle East and Europe. Those kinds of activities require long-term investment and planning. Perhaps now is the time that it needs to be done.
In terms of consumer goods, at the moment Turkey is doing its best to try to curb imports in order to reduce its current account deficits. In terms of selling to Turkey, Turkey is looking, over the medium term, to produce more intermediate and consumer goods in Turkey rather than import them. Perhaps it is not the right time to go in. I am not an expert on business strategies.
I think that the medium- and long-term prospects for the Turkish economy are positive because of the demographics and its geographical location between east and west. Even though there are difficulties with Syria, tensions with the Iraqi federal government and with Iran, and disastrous relations with Israel, Turkey has continued to expand its exports since the beginning of this year. It is a vibrant economy, it is extremely dynamic, and it is very good at diversifying when one avenue shuts down. It is very good at seeking out opportunities elsewhere. I would put my money on Turkey being a good place to invest.
Senator Wallace: One other question: You mentioned that constitutional reform is under way in Turkey to revise the military constitution from 1984. You said that one of the constitutional changes being considered would affect the media and individual rights, I suspect, that exist in Turkey.
What would be a couple of the other major issues that they are seeking to address through constitutional reform? Without getting into the detail of it, what would be some of the major changes that might, from a western perspective, more align it with western countries?
Mr. O'Daly: Constitutional reform and the Kurdish issue go hand in hand and are closely interrelated.
The constitution would enhance individual rights and ethnic minority rights, so individual rights would be enshrined in the constitution in a way that they have not been enshrined in the past. That would have a major impact on the way the EU, for example, assesses Turkey. It is one thing to change the constitution; it is another thing to implement changes and enforce the changes in ordinary law after the constitution has been changed. It is a very long process and a very ambitious project.
Unfortunately, there does not seem to be consensus in Parliament on the shape of the new constitution that is being drafted at the moment. There is not a clear majority that would back some of the proposals that have been put forward so far. There is a risk that many of the positive changes that would be introduced to recognize minority rights, religious rights, and ethnic rights in Turkey would make it more difficult for the judiciary to close down political parties. Some reforms will be abandoned because the focus at the moment, unfortunately, is entirely on the controversial issue of whether the system should be changed from a parliamentary system to a presidential system and the direct election of a president with executive powers. The positive proposals and tensions that emerged during the election campaign last year regarding constitutional reform seem to have been put to one side.
Senator Wallace: Thank you, Mr. O'Daly.
Senator Robichaud: My question was answered because when you mentioned constitutional reform, you also mentioned in your presentation the power of the presidency. I think you addressed it in an answer to Senator Wallace.
Senator Johnson: Thank you, Mr. O'Daly.
I would like to ask you about the request from Turkey yesterday to NATO with regard to patriot missiles and also Rasmussen suggesting that they would explore potential sites. If this is the case, or if it could possibly happen, which countries might provide the system? I know they have to do it because NATO has to look at the request, but do you have anything further to add on this subject?
Mr. O'Daly: From what I read, and from what I understand, the U.S., Germany and the Netherlands have patriot missiles. There was a strong, supportive statement from the German foreign minister today. It was quoted in the Financial Times, which suggests that there is a willingness to support Turkey on this. However, the decision needs to be made.
I believe there will be considerable reluctance among NATO members to get too closely involved in situations in Syria and in the tensions between Syria and Turkey. I think it depends on the willingness to support Turkey and the availabilities of missiles from one of the countries that has them.
Senator Johnson: On another matter, you have spoken about the escalating fight with the Kurdish militants, but the Prime Minister has been suggesting that he would reinstate the death penalty that was abolished in 2002 and was part of Turkey's bid to enter into the EU. Do you have further information on that? Is he serious? He has mentioned it several times.
Mr. O'Daly: I think the wording was ``for terrorist crimes, if necessary.'' I think he is playing to a particular audience, namely to the hard right in Turkey, the nationalist vote. He needs to keep an eye on the support that he would need to be elected president in 2014. Perhaps the nationalist party that is in opposition, and which reluctantly approved the abolition of the death penalty when it was in government in 2001, might be a potential candidate for support for the kind of constitutional reform Mr. Erdogan is looking for, namely, the introduction of a presidency with executive powers.
However, I think it needs to be noted that before the death penalty was abolished no one had been executed in Turkey for 10 or 15 years before that. While it may please some hard-line nationalists in Turkey, I do not think that there is widespread popular support for that kind of backtracking on the reform that was carried out under the guidance of the EU.
The Chair: Mr. O'Daly, I have one, hopefully quick, question. If I can summarize many of your answers, they seem to say that the government is rather committed to an open, commercial, economic agenda. What is less clear is the political agenda, which seems to be more pragmatic than ideological. They moved to the EU when it was in their best interest. When that option moved too slowly, they looked to new markets in the Stans, in Africa, and strategically to play a more significant role on the Middle Eastern flank.
Is it correct to say that they are pragmatic and practical about positioning themselves, but that their economic progress has been rather consistent?
Mr. O'Daly: Certainly, they do not have constructive use of coherent opposition. They have been 10 years in government, so I suppose to some extent there is consolidation, due process going on in the institutions in Turkey.
One thing that the ruling party is fully aware of is that the main reason why the government is in power in the first place and the main reason why they were re-elected in subsequent elections and that is because of their sound management of the economy. If they get that wrong in the future, they will not be voted back in. That seems to be a major priority for the government, and policy-making has been sound so far. I believe that it will continue that way.
The Chair: Mr. O'Daly, we have run out of time. Thank you for covering so many issues and coming to us by video conference. It does not always work all the time, but we are very pleased that we were able to garner as much information as we have today from you. Thank you very much for appearing before us.
Mr. O'Daly: Thank you for inviting me.
(The committee continued in camera.)